Tax rate discussion set for Monday

July 25, 2019

The Cape Coral City Council will face its first big decision in regards to the proposed FY 2020 budget Monday.

The Council will set its not-to-exceed millage rate, which means the city will not be able to adjust it upward once the cap is approved.

Council could, if it chooses, still reduce the rate.

This, along with the assessments the city decided upon last week, will be the basis on which the board will work when Council and Budget Review Committee then hold their first joint meeting Tuesday at 1 p.m. in Council Chambers.

Cape Coral City Manager John Szerlag released his proposed FY 2020 budget this week, which includes a recommendation to lower the property tax rate to 6.55 mills. This would be the fourth reduction to the property tax rate since FY2014, but the first since 2017 after Irma. The current property tax rate is 6.75 mills, or $6.75 per $1,000 of assessed property valuation. One mill is equal to $1 for every $1,000.

In addition to property taxes, two other taxes contribute to the city's General Fund, or operations budget.

The city fire service assessment is expected to increase to 64 percent, while the public service tax on electric bills will remain at 7 percent.

On a home with a taxable value of $150,000 last year, there would be about a $5 savings with the proposed property tax rate. If the Fire Service Assessment is added, there is a net increase of about $9, city officials said.

Mayor Joe Coviello said he is happy with the recommendation to finally drop the millage rate and would like to go lower.

"The decrease is a step in the right direction. We'll have a couple workshops in August and we'll be talking about the PST and FSA, and I'd like to see if we can get to the rollback rate," Coviello said.

The rollback rate, the rate that would generate the same amount of property tax revenues as approved for the prior year, is 6.4903.

"I think since we held the line last year in order to cover ourselves if the homestead referendum passed, we could do better than .20," Stout said. "I think we can do the rollback and that might not be enough."

Councilmember John Carioscia, though, said while he is for cutting the millage, he could not commit to that yet as he wants to see some things first.

The department of Code Enforcement, in particular, is lacking, he said.

"We're down about six officers and until I get some numbers, I can't address the millage," Carioscia said. "We also have about $9 million that has been absorbed from last year's budget to this next one. I want to know where it went. There needs to be accounting."

As far as setting to not-to-exceed millage, Coviello said he would probably work on the side of caution and recommend the current rate.

"I think we should err on the side of being conservative, knowing that we want to get to the rate proposed by the city manager," Coviello said. "We know what happened with Irma."

The city learned that lesson in 2017. The city planned to decrease the millage a quarter point, but when it was time to set the not-to-exceed millage the first time, they left it the same.

Then Hurricane Irma hit, resulting in the city having to spend millions on clean-up and so keep the current rate.

Had it made the reduction in August it would have resulted in a fiscal calamity, since there was no going back from the original decision, officials said.

The city will receive a portion of that money back for reimbursement. However, it is not in this year's budget because it is not known when the city will receive it. Coviello said that money could go back into reserves.

The city also will get some money back as it anticipated the passing of a referendum that would have increased the homestead exemption another $25,000.

That failed at the ballot box last November.

For the FY 2020 proposed budget, the total for all city funds is $897,493,398. The General Fund represents $233,409,130 of the budget.

The proposed budget includes:

n $6.5 million for local road paving;

n $100,000 for new streetlight fixtures;

n $312,000 for median improvements;

n $520,000 for alley paving.

No fund balances will be used, and will remain 3.09 months of expenditures.

Among the things that could be discussed in the joint budget workshop Tuesday is more spending on sidewalks. The city has received grants annually to install them in needed areas of the city.

However, Councilmember Jessica Cosden warned that the city needs to start spending more of its own money for them, as it is woefully deficient.

The death of Layla Aiken, 8, who was struck by a truck while waiting for a school bus, brought a new city emphasis on sidewalks and bus stop safety.

"That's a discussion we need to have. We will continue to get the grants, but the city has to chip in and pay for sidewalks," Coviello said. "As the city builds out, we may need to look at allocating funds."

Coviello added that once the city catches up with road paving, they could use some of that money for sidewalks.

After a series of workshops, Council will hold two public hearings on the Budget in August.

Monday's meeting will begin at 4:30 p.m. in the Council Chambers at City Hall, 1015 Cultural Park Blvd.